Nov 29, 2011
101
0
16
bali
Has anyone been challenged by the tax office about paying 10% tax on their land lease purchase? Any info would be great. We have just heard about it and understand that it is for the seller to pay, if they don't the tax man goes after the purchaser!

We also have been advised about paying tax of 2% of build costs?

Any employers out there that do or do not pay tax on staff salaries (we have a hotel)?

We thought we saw something somewhere before about land lease tax but can't find the thread and maybe it is not current so any new feedback would be great.

Thanks
 

ferdie

Member
Apr 4, 2013
677
2
16
Near Ubud
Who gave you these advise? Its like he/she are trying to scare you to death
The only thing I knew that would make you got into trouble is if you have try to play down the number value of the transaction to pay lesser tax.

In my opinion the 2 % tax on construction applies to the building that you are going to sell (property companies) but you will have to get a better opinion from a tax consultant.

For the hotel it is the right thing to do, once you have a formal hotel, better get a tax id number and start doing your obligations, such as VAT tax, salary tax, etc.
 
Nov 29, 2011
101
0
16
bali
Hi Ferdie,

No one is in trouble and we haven't down valued anything, and whilst trying to do things properly, the tax man turned up the other day at our establishment with forms which we duly passed onto our accountant, hence the implications and numbers being mentioned.
 

ferdie

Member
Apr 4, 2013
677
2
16
Near Ubud
Taxman from the tax office?
FYI, our tax officials had a very bad reputation in the past of trying to overwhelm the people with so many false interpretation about what they have to pay, either its too ask for extra money or to fulfill their yearly target :grief:

My advise to you is get a smart and diligent accountant to make sure your accounting records are reliable and done in a timely manner
 
Nov 29, 2011
101
0
16
bali
Well you, they did well in scaring the hell out of us as 10% of an expensive land lease is a big hole in the pocket! Not sure on how we are supposed to become unpaid tax collectors either!

Someone must have heard of these tax issues or experienced them before we came along?
 

Markit

Well-Known Member
Sep 3, 2007
9,317
1,110
113
Karangasem, Bali
Tax in Indonesia is a funny old thing. Fact is more than 80% don't pay a damned thing and the only people that do are those employed by large companies and those that can't get out of it, such as government employees, police, soldiers, etc.

What Ferdie meant I think was that with the connivance of the notary (witting or otherwise) many property transactions here are listed on the books at way under the true sale price - this reduces the amount needed to assuage the tax man considerably. Not that anyone here is advocating this dreadful and illegal process.

Best advice I can think of is to go to another hotel (out of your area - think, competition, and perhaps with an introduction from a friend and ask the manager/owner there what they advise).
 

ferdie

Member
Apr 4, 2013
677
2
16
Near Ubud
I'll quote the Indonesian version of the rent tax :
Pemotong PPh
Pemotong PPh atas penghasilan yang diterima dari persewaan tanah dan/atau bangunan adalah :
1.Apabila penyewa adalah badan pemerintah, Subjek Pajak badan, dalam negeri, penyelenggara kegiatan, bentuk usaha tetap, kerjasama operasi, perwakilian perusahaan luar negeri lainnya dan orang pribadi yang ditetapkan oleh Direktur Jenderal Pajak, maka Pajak Penghasilan yang terutang wajib dipotong oleh penyewa dan penyewa wajib memberikan bukti potong kepada yang menyewakan atau yang menerima penghasilan;
2. Apabila penyewa adalah orang pribadi atau bukan Subjek Pajak Penghasilan selain yang tersebut pada butir 1 di atas, maka Pajak Penghasilan yang terutang wajib dibayar sendiri oleh pihak yang menyewakan.

The bold part means that the owner has the obligation to pay the tax personally, not you.
You are not authorized to collect tax (unless at the time you already had a tax ID number and were appointed as a tax withholder :concern:), therefore it would be illegal for you to do any tax collection.
 
Nov 29, 2011
101
0
16
bali
Well thanks for that little gem Ferdie, perhaps you should become our accountant! Any others on our questions would be most welcomed!

Meanwhile we have forwarded your paragraph to our accountant............

Anyone else out there with feedback about any of our quieries?
 

ferdie

Member
Apr 4, 2013
677
2
16
Near Ubud
being a good accountant means you have to know more than your consultant and the tax officials:greedy_dollars:

It has a lot of technical details to run through all your answers crosskey, do you or your business (hotel) has a tax ID number?
What is your status in Bali? how long did you stay every year?
If you don't have a tax id number all those problems are not going to come at your plate yet, but if you do than the problem would start :p
 
Feb 15, 2013
484
6
18
Jakarta
Tax in Indonesia is a funny old thing. Fact is more than 80% don't pay a damned thing and the only people that do are those employed by large companies and those that can't get out of it, such as government employees, police, soldiers, etc.

What Ferdie meant I think was that with the connivance of the notary (witting or otherwise) many property transactions here are listed on the books at way under the true sale price - this reduces the amount needed to assuage the tax man considerably. Not that anyone here is advocating this dreadful and illegal process.

Best advice I can think of is to go to another hotel (out of your area - think, competition, and perhaps with an introduction from a friend and ask the manager/owner there what they advise).

If I am not mistaken, steps have been taken to try to close this loophole. The local authorities (PEMDA) are now checking up on transactions that look fishy, and putting their own valuation on the property in question. But as Sage from the East has stated above, doing your transaction through a well connected notaries/PPAT can still yield some benefits, although not as great as before.

Merry Christmas and a salubrious festive season to everyone here.

:topsy_turvy::topsy_turvy::topsy_turvy:
 

ferdie

Member
Apr 4, 2013
677
2
16
Near Ubud
Crosskey, I felt like I owe you the answers to the other questions :icon_biggrin:

The first thing that you have to answer did you or your hotel have a Tax ID registered to the local tax office?
If you do, you will be bound to multiple tax obligations and retributions to the local govt (PEMDA)

On the the 2 % building tax if you built the villa/hotel yourself, they have a legitimate rule for that.
But that rule was rarely enforced because it is one of the most unpopular tax among Indonesians, most of the people couldn't afford a decent house so enforcing this kind of rule will create outrage among the common people.

On the staff salary tax, it is a common in every country to enforced income tax from every citizen including the hotel workers, it is only small in numbers but could become a hassle plus a boring process :concern:
Any staff that receive more than 2 million in salary is going to get taxed, that will be something ypu should negotiate with the staff, who will pay for that and how much is the take home pay after tax for your staff?

My advise get a tax consultant if your accountant can't do this kind of reporting and negotiating with the tax office, I'm sure the tax office would be happier if you pay the tax even a little less instead of nothing at all :icon_biggrin: